Unethical customers, what to do with them?

By Ken Kukral

In honor of CPCU’s ethics month, I decided to put my two cents in on the subject.  While many Insurance Departments have pushed to add continuing education requirements for ethics (Ohio just recently added the requirement for 3 hours every two years) I wanted to approach it from a different angle, namely “customer ethics”.

I think we all at one time or another have been asked by one of our customers to do something “unethical”.  Does that make that customer “unethical” too?  That depends…. Does the client truly realize what they are asking you to do is “unethical”?  An example might be when they turn in an auto physical damage claim for “new” damage for a auto that was previously damaged and they didn’t submit a claim on.  They may figure, both are physical damage losses and both would be covered so why not turn them in?  If one was from them backing into a fence post and the other from their neighbor’s son backing out of his driveway right into your car then there is an issue.  Why should your neighbor’s auto insurance company pay for damage you caused.  See where I am heading with this?

OK, now that we have defined what I am talking about, what do we do with them?

Also, if we don’t immediately send a client packing when they ask us to do something “unethical”, are we then guilty by association?  This really came to the forefront when I found a section of the insurance code:

Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence, untrustworthiness, or financial irresponsibility, in the conduct of business in this state or elsewhere;

What this means is that the insurance department can revoke your license if you perform a “dishonest” practice (I would equate this to an “unethical” practice.  So I guess I answered my own question, I would be guilty by association.

So how should you deal with these situations and prevent them in the future?

1.  Set high ethical standards in your agency.  Your staff will follow your lead and will not accept “unethical” practices from your customers.

2.  Train your staff to detect “unethical” practices or fraud on behalf of your customers. This way they can notice it and put an immediate stop to any “unethical” behavior.

3.  Let your staff know that they do not have to sell every client.  That they have the authority to walk away from an “unethical” client and face no repercussions.  In fact they should bring it to your attention so you can support them.  When in doubt, have them seek you out.  Keep in mind that you are judged by the company you keep.  If you are willing to put up with “unethical” behavior on the part of your clients, you will be seen as being “unethical”.

4.  It may sound simple, but build a relationship with your client.  When you have a relationship with them they no longer see you as a faceless entity and they are less likely to pull an “unethical” stunt.

5.  Another way to put things into perspective is by asking the question:  “How badly do we want to retain a bad customer?”

6.  Remind yourself that once you give in, you can never go back.  You have gone over to the “dark side”

7.  Make sure the ethical standards apply to every corner of your business.  From your carriers, to your vendors, to your customers and to your staff.  It is not easy taking the “high road” but you will certainly sleep better knowing your have.

8.  As Ronald Reagan often said, “Trust but verify”.  You will be given a considerable amount of underwriting information from your clients that you must trust in order to get  an account underwritten.  Do not take that information blindly.  Trust what they gave you but make sure you verify the information from other sources.  Underwriters can tell when you have been out to visit the account and know a significant amount of information or if you have gathered the information over the phone.  Ask questions and learn.  Get the information needed so your underwriter can do their best work.

9.  Ask questions.  If something seems out of line ask more questions.  They say the best way to deal with teenagers and keep them off alcohol and drugs is ask more questions,  Where are you going?  When will you be back?  Who are you going with?  Who  is Bill, I have never heard you mention his name before?  Can I call his parents to verify?……  you get the point.  Many times if you don’t ask the questions they will not volunteer the information.

10.  Last of all, set standards.  Advise what behavior or practices are unacceptable.  Convey these to your staff and make sure they know you are serious about running an ethical shop and you are not looking for “unethical” customers.

In this period of economic uncertainty we might look to soften our standards, but we will pay for it in the long run.  It should never be a question of if I can “afford” to be ethical in a particular situation, since you can’t “afford” NOT to be.  Plain and simple.

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